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Designing Your Portfolio


At Cardiff Park our focus is on managing globally diversified stock and bond portfolios, principally through the use of low-cost, tax efficient, passively managed stock and bond index funds. Client portfolios are generally composed entirely of no-load, no redemption fee mutual funds, with low fixed trading costs. We generally recommend passively managed index funds offered by Dimensional Fund Advisors (DFA) as core investments.


Portfolio design begins by establishing each individual client’s risk tolerance, time horizon, goals, preferences, and anticipated changes in financial situation. For details, see “Assessing Your Needs.” Based on this information, we can create a portfolio using the appropriate mix of asset classes.


Asset classes include U.S. and foreign stocks, large and small-cap stocks, value and growth stocks, various forms of fixed income securities and bond funds, and cash or cash equivalents. Publicly traded real estate trusts (REITS), gold and commodity mutual funds, or Exchange Trade Funds (ETF) also may be recommended as part of an asset allocation strategy.


Within each asset class, the composition of investments may follow models defined by Cardiff Park or can be customized to suit individual client preferences and specific objectives.  


When determining the proper ratio of equities to fixed income, we also incorporate a client’s IRA, 401(k) and other savings accounts into design of the overall Investment strategy. Our clients benefit from the coordinated management of their accounts as a single portfolio rather than as separate unrelated portfolios. Planning for future rebalancing requirements also may influence initial distribution of assets across taxable and tax exempt accounts.


Initial asset allocation also may be influenced by a review of inflation, interest rates, market valuation and other economic indicators. Generally, however, we do not use tactical asset allocation strategies to manage client portfolios.


All Cardiff Park portfolios are tax aware and based upon long-term “buy and hold” Investment strategies. Allocations to asset classes with relatively high expected taxable distributions are emphasized in tax exempt accounts. Allocations to asset classes with relatively low expected distributions in taxable accounts can increase the expected rate of return on the entire portfolio. The coordination and management of asset classes across different accounts permits rebalancing of the entire portfolio while paying lower capital gains.